New York CM Report of Recent Decisions
2006 Volume 1
A summary of significant recent developments in the law focusing on substantive issues of litigation and featuring analysis and commentary on special points of interest.
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Articles in this report
Forestview the Beautiful Followed in New York
11 Essex St. is a decision by a trial court in New York, and is therefore not controlling authority in the state. However, since the trial court cited cases from other jurisdictions to support its holding, it appears that there may be a trend of courts to agree with insurers that partial cessation of business does not constitute a business interruption claim.
In Biafora v. City of New York, 2006 NY Slip Op. 1754, 2006 N.Y. App. Div. LEXIS 2801 (2d Dep’t 2006), Plaintiff was injured while unloading concrete for use in a construction project at a facility owned by Defendant, The City of New York. Plaintiff also filed suit against the general contractor, Pile Foundation Construction Company (“Pile”).
Defendants moved for summary judgment, which was denied. The Appellate Division reversed and granted the dismissal of certain portions of Plaintiff’s claims.
New York Appellate Court Holds that Faulty Ingredients that Seriously Impair a Product's Function and Value Constitute "Physical Damage" Under an All-Risk First-Party Property Policy
Under Pepsico, an insured is not required to prove a distinct demonstrable alteration of its product’s physical structure by an external force for coverage under an all-risk first-party property policy that provides coverage for “physical damage.” Rather, where the policy fails to define the term “physical damage,” it is sufficient for the insured to show that the value and function of its products have been so seriously impaired that the product cannot be sold.
New York Court of Appeals Resolves Appellate Division Conflict: Illegal/Undocumented Laborers May Receive Lost Wages
In Balbuena/Majlinger, the Court of Appeals was confronted with opposite decisions from First and Second Appellate Departments regarding the issue on hand. In its final decision, the Court decided to protect workers and state’s rights, as opposed to punishing illegal workers under the federal statute. This decision should not change the behavior of New York’s employers, as they must continue to provide all requisite safeguards to their employees under the Labor Law. Further, there is unlikely to be a stream of illegal workers to the State as a result of this decision, nor is it foreseeable that illegal workers will become intentionally injured under the theory that they will be able to recoup for lost wages.
New York Judge Finds "Emergency Room Exception" to General Rule Against Vicarious Liability
Hospitals should note that a physician serving as an attending surgeon of the Hospital will not suffice to impose vicarious liability on the Hospital, in the absence of other factors. However, a hospital can be vicariously liable for a physician’s actions if the patient enters the hospital through the emergency room, despite the patient’s pre-existing appointment to see the physician.
Texas Judge Enforces Policy Language Requiring Physical Damage as a Prerequisite to Coverage for the Living Expenses of Displaced Homeowners
A Texas judge recently held that where an insurance policy requires the insured to prove physical damage to the insured property before the insurer is required to pay living expenses for displacement, courts will strictly interpret the terms of the policy. The case was filed in the 261st Judicial Civil District Court, in Travis County, Texas, and styled as The Texas Commissioner of Ins. v. Allstate Ins. Co., Cause No. GN503652.
Vermont Supreme Court Holds Independent Adjusters Have No Direct Duty to Homeowners/Insured, but Insurer may be Liable for an Independent Adjuster's "Bad Faith" Adjustment
The Vermont Supreme Court followed the lead of other jurisdictions in holding that independent adjusters have no direct duty to insureds. However, if an independent adjuster’s conduct constitutes “bad faith,” the insurer may be liable to the insured for that conduct.
